BUSINESS PROCESS MANAGEMENT CASES Digital Innovation and Business
BUSINESS PROCESS MANAGEMENT CASES Digital Innovation and Business Transformation in Practice EDITORS: Jan vom Brocke Jan Mendling
ADOPTION OF RFID TECHNOLOGY – THE CASE OF ADLER. A EUROPEAN FASHION RETAIL COMPANY Roland Leitz, Andreas Solti, Alexander Weinhard, Jan Mendling
INTRODUCTION
Introduction Adler Modemärkte AG is a fashion retailer focusing on best ager customers in the value-for-money segment • Annual revenue: 566. 1€ million, EBITDA: 33. 3€ million, EBIT: 17. 0€ million • 4, 203 employees • Clear focus on the target group of 45+ years • Average of customers: 60 years Strong loyalty program: • 6. 2 million active customers with loyalty card (90% of sales revenue with loyalty cards) • Targeted and efficient marketing strategies by customer segmentation • High profitability, due to better planning and control of customer frequency and sales revenues
SITUATION FACED
Situation Faced RFID Technology Readiness • First movers in fashion began to adopt RFID in the early 2000’s • Decision to adopt RFID at ADLER in 2010 • Goals of RFID adoption: – improve process efficiency and effectiveness – increase customer satisfaction through faster checkout – prevent theft – provide better visibility of inventory
Situation Faced Scope of the project • RFID for entire textile assortment: – 87 % inhouse ADLER brands – 13 % external brands • 179 stores • Store areas: 1, 000 to 4, 000 m² with different layouts • Sales volume 27 million pieces
ACTION TAKEN
Action Taken RFID process improvement project • Three phases: 1. Conception and provider selection 2. Realization and preparation of rollout 3. Rollout • After each phase, the business case was evaluated for profitability
Action Taken Phase 1: Conception and provider selection • RFID adoption project with support of external consulting company • Evaluation of potential suppliers for required RFID equipment in realistic proximity
Action Taken Phase 2: Realization and preparation of rollout • Pilot study with complete IT integration • Conceptual pilot done in parallel as verification location • Scalability test: Aug. -Nov. 2012 6 further stores equipped with RFID • Provided RFID-tags for source-tagging since April 2013
Action Taken Phase 3: Rollout 05/2013 -07/2013 : Rollout of Handheld scanners and RFID Servers 06/2013 -01/2014: planning of points of reading in stores and necessary infrastructural changes 07/2013 -03/2014: Initial tagging of inventory in respective stores 08/2013 -03/2014: Installation of reading points 08/2014 -04/2014: training and go-live • initially 4 stores / week • from October 8 stores / week 05/2014 -06/2014: extra training and extended software releases
RESULTS ACHIEVED
Results achieved • Improved inventory accuracy – Real time tracking of items – Reduction of out of shelf situations – Increased turnover • Improved follow-up procurement – Early detection of missing items (e. g. through theft or administrative errors) lead to more accurate and timely replacement orders
Results achieved • Increased process efficiency – Recording of incoming and outgoing items in batches instead of manually scanning individual barcodes – Faster and more accurate RFID-enabled inventory counts (ADLER also started to introduce robotic inventory taking) • Faster processing at the point of sale – Reduced lines at the cashiers desk – Improved customer satisfaction
Results achieved • Source tagging and theft prevention – Replacement of costly plastic hard tags with lightweight RFID tags – Today, 90% of all items are equipped with RFID-enabled theft prevention instead of only high-value items
LESSONS LEARNED
Lessons learned • Set realistic goals – ADLER resisted the urge to adopt RFID in its hype and waited till it was economically reasonable • Carefully consider potential risks – ADLER decided to prevent potential privacy related threats by using disconnected systems for storing RFID data
Lessons learned • Take a process-oriented view and get the employees on board – Technology is merely a means to achieve a process goal • All in all the adoption of RFID paid off and serves as a basis for further process improvement
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